Benefits to Buller consumers from Pulse investment

Buller Electricity is pleased to release the results of
an investigation into the benefits to consumers in the
Buller region arising as a consequence of their investment
in Pulse Energy Limited (Pulse). Buller Electricity
commissioned Andrew Shelley an independent economist to
undertake the investigation.

A primary driver for Buller
Electricity investing in Pulse was a desire to encourage
retail competition in the Buller region. Historically,
consumers connected to the Buller Electricity network have
faced some of the highest electricity prices in the country.
In part it was assumed that this was a consequence of a lack
of retail competition and therefore any improvement in the
level of completion would provide benefits to
consumers.

Buller Electricity Chairman Frank Dooley said
that the investment in Pulse has been the focus of attention
by a number of parties, but it is pleasing to announce that
analysis by Mr Shelley indicates the benefit to Buller
domestic consumers resulting from the investment can be
estimated at $575,000 per annum or $4.76 million over 10
years. Mr Dooley also noted that this benefit does not
include the benefits that may accrue to commercial consumers
or to Buller Electricity as an investor in Pulse, such as
future dividends or the increase in the capital value of
shares owned.

"There has been a lot of talk in recent
weeks about changes that need to be made in the electricity
sector to benefit consumers" said Buller Electricity Chief
Executive Erik Westergaard. "This report highlights how
important it is for regulators to foster and sustain real
competition, especially in the regions where competitive
pressures may not be strong. The research by Mr Shelley has
highlighted a possible problem with electricity markets in
some areas of New Zealand. It has been known for some time
that an absence of generation in a region and the risk of
transmission constraints create a potential barrier to entry
to retail electricity markets with the natural consequence
being higher electricity prices for consumers in some
regions. It is important when considering changes to the
electricity market that policy makers reflect on the
consequences that those changes have on regional communities
as well as the broader national benefit tests that they may
apply."

The benefit to a residential low user is estimated
to be $120 per year while standard tariff residential
customers have an estimated $177 benefit, reflecting their
higher electricity consumption. "This is money that is going
to be spent by consumers in the local community, benefitting
local business as well, so the economic benefit to the
region will likely be higher than the $575,000 estimate in
the report" said Mr Dooley.

Mr Westergaard noted that this
benefit was incremental to the price reduction that
consumers may receive as a consequence of moving to the best
retail price option for them.

Buller Electricity is the
majority shareholder in Pulse holding approximately 59% of
issued shares. Pulse currently has a market share of roughly
20% of ICPs on the Buller Electricity
network.

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